Employers Should Audit and Update Employment-Related Policies and Agreements in Light of New “Defend Trade Secrets Act”

President Obama recently signed the Defend Trade Secrets Act (the “Act”) into law. The Act creates a new cause of action - which became effective immediately - for trade secret misappropriation.

Prior to the Act, civil claims for trade secret misappropriation were primarily governed by state law. The Act creates federal jurisdiction for claims brought under the Act, which provides plaintiffs with the option to sue in federal court.

While there are a number of important aspects of the Act that businesses should be aware of, one requires immediate action. The Act contains a clause that gives immunity to whistleblowers for disclosure of trade secrets to government officials for the exclusive purpose of reporting violations of the law. An employer must provide notice of the immunity “in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.” Employers who fail to provide such notice cannot recover punitive damages or attorneys’ fees under the Act (to the extent applicable).

Accordingly, employers should review and update contracts, policies, handbooks and other agreements that address the use of trade secrets. Contact your Foster Swift attorney for assistance in order to ensure compliance with the Act.

Taylor helps businesses and business owners solve and prevent problems as a member of Foster Swift's Business and Tax practice group. He handles business formation and transactions, tax controversies, employee benefits, and technology related issues.

John brings a unique perspective to Foster Swift with his practical experience as an entrepreneur, business owner, and manager. He focuses in the areas of business, tax, intellectual property and entertainment.